HAMBURG (Reuters) - European demand for rolled aluminum products remains firm despite the region’s sluggish economic growth, the European head of U.S.-based Novelis [NVLX.UL], the world’s largest rolled aluminum product producer, told Reuters.
“For Europe, we’re seeing good demand in our key markets of can and automotive,” Emilio Braghi, Novelis’ senior vice president and Europe president, said in an interview for LME week, a gathering of the world metal industry in London.
“This growth is driven by favorable material substitution trends and continued automotive and packaging mix shift towards aluminum,” Braghi said.
“Sustainability is driving increased demand for aluminum as our customers are working to reduce the weight, improve the recyclability and increase the recycled content of their products.”
Novelis, a unit of India’s Hindalco Industries, produced more than 3.1 million tonnes of flat rolled products worldwide in its fiscal year through March 2016, up 2 percent on the year, serving major markets including automotive, cans, architecture/buildings and consumer goods.
In Europe it has production and recycling operations in Germany, Italy, Britain, France and Switzerland.
This year the company also substantially expanded its U.S. automotive capacity by commissioning another automotive product rolling line at its plant in Oswego, New York.
“While (beverage) cans remains a core product in our portfolio, automotive is our growth engine,” Braghi said.”We are in ongoing discussions with multiple OEMs (original equipment manufacturers) about their plans for future aluminum use in their vehicles.
“Globally, we anticipate double-digit growth in the use of automotive aluminum by the end of the decade, and we are optimizing recent infrastructure investments to meet demand in Europe, North America and Asia,” he said.
In 2014, Novelis opened an aluminum recycling plant in Nachterstedt in east Germany to produce 400,000 tonnes of aluminum annually using scrap.
“Ramping up of the Nachterstedt recycling center is on plan,” Braghi said.
Novelis raised its recycled aluminum content in product production from 33 percent in 2011 to 53 percent in fiscal year 2016, he said.
With aluminum prices still generally below first-half 2015 levels, some scrap merchants find it not worthwhile to collect old metal.
“At Novelis, we have not experienced a shortage of scrap availability,” he said.
This was partly due to wide supply diversification and closed-loop recycling agreements, under which Novelis takes aluminum scrap produced by its customers in their manufacturing operations.
Editing by David Holmes